A summary based on the 700 page book 'Principles of Marketing' by Philip Kotler and lectures of the course Marketing. (IBMS, 1st year). This includes all chapters (1-20) except ch 4. All important information is stated and all important figures are included in the summary. Good luck with your test!
Principles of Marketing
Chapter 1: Marketing: creating value and capturing customer value
(p. 2-29)
WHAT IS MARKETING?
Marketing defined
Marketing = The process by which companies create value for customers and build strong customer
relationships to capture value from customers in return.
The marketing process
UNDERSTANDING THE MARKETPLACE AND CUSTOMER NEEDS
Core customer and marketplace concepts:
• Needs, wants and demands
1
, • Market offerings (products, services and experiences)
• Value and satisfaction
• Exchanges and relationships
• Markets
Customer needs, wants and demands
Needs = States of felt deprivation
Physical, social and individual needs
Wants = The form human needs take as they are shaped by culture and individual personality
Shaped by one’s society and what will satisfy one’s needs
Demands = human wants that people can afford to buy
Market offerings – products, services and experiences
Market offerings = Some combination of products, services, information or experiences offered to a market to
satisfy a need or want
Marketing myopia = The mistake of paying more attention to the specific products a company offers than to
the benefits and experiences produced by these products. Sellers who only focus on the ‘wants’ instead of the
customers’ needs.
Selecting customers to serve
Market segmentation = dividing the market into segments of customers
Target marketing = selecting which segments to go after
Choosing a value proposition
Value proposition = the set of benefits or values it promises to deliver to customers to satisfy their needs
Marketing management orientations
Concepts under which organisations design and carry out their marketing strategies: production, product,
selling, marketing and social marketing.
The production concept = Customers favour available and high affordable products → organisation
should focus on production and efficiency.
The product concept = Customers favour quality, performance and features → organisation should
improve their products
The selling concept = Selling and promoting, otherwise people will not buy it
The marketing concept = Knowing needs and wants → deliver desired satisfaction better than
competitors
2
,The societal marketing concept = Marketing decisions based on long-term interests
PREPARING AN INTEGRATED MARKETING PLAN AND PROGRAMME
Marketing mix / 4 P’s: product, price, place and promotion.
BUILDING CUSTOMER RELATIONSHIPS
Customer relationship Management (CRM) = The overall process of building and maintaining
profitable customer relationships by delivering superior customer value and satisfaction.
Relationship building blocks: customer value and satisfaction
Customer value
A customer buys from the firm that offers the highest Customer-perceived value = The customer’s evaluation of
the difference between all the benefits and all the costs of a marketing offer relative to those of competing
offers.
Customer satisfaction = The extent to which a product’s perceived performance matches a buyer’s
expectations.
Customer relationship level and tools
Basis / full relationships
Frequency /club marketing programmes
The changing nature of customer relationships
Relating with more carefully selected customers
No mass marketing, because today’s marketers don’t want a relationship with every customer.
Relation more deeply and interactively
Customer-managed relationships = Marketing relationships in which customers, empowered by today’s new
digital technologies, interact with companies and with each other to shape their relationships with brands.
Consumer-generated marketing = Brand exchanges created by consumers themselves – by which consumers
are playing an increasing role in shaping their own brand experiences and those of other consumers.
Partner relationship management = Working closely with partners in other company departments and
outside the company to jointly bring greater value to customers.
Partners inside the company
Marketing partners outside the firm
Suppliers, channel partners, competitors.
3
, CAPTURING VALUE FROM CUSTOMERS
Creating customer loyalty and retention
Customer lifetime value = The value of the entire stream of purchases that the customer would make over a
lifetime of patronage.
Growing share of customer
Share of customer = The portion of the customer’s purchasing that a company gets in its product categories.
Building customer equity
What is customer equity?
Customer equity = The total combined customer lifetime values of all of the company’s customers.
Building the right relationships with the right customers
Strangers: don’t invest anything in them
Butterflies: profitable but not loyal → capturing as much of their business as possible in short time, then cease
investing
True friends: continuous relationship investments
Barnacles: very loyal, but not profitable → selling them more, raising their fees or reducing service
To build the right relationships with the right customers.
THE CHANGING MARKETING LANDSCAPE
The uncertain economic environment, the digital age, rapid globalisation, the call for more ethics and social
responsibility and the growth of not-for-profit marketing.
The uncertain economic environment
Crisis 2008/2009
The digital age
The digital age has provided marketers with exciting news ways to learn about and track customers and create
products and services tailored to individual customer needs. It’s helping marketers communicate with
customers in large groups or one-to-one. Online marketing is now the fastest-growing form of marketing.
Rapid globalisation
In an increasingly smaller world, companies are now connected globally with their customers and marketing
partners.
4
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